Business owners can cause big problems for their families and their companies if they do not make a will. Serious complications can arise unless a well-drafted will is included in succession plans for director shareholders. Failure to draw up a will can also leave families with an unwelcome and unnecessary tax bill.
While many are well aware of this, it isn’t unusual to come across younger entrepreneurs and business owners in their 30s and 40s who have not yet made a will and are not fully aware of the implications of this omission. In fact, about 50% of adults in the UK do not have a valid will at all, according to a survey by Will Aid, which represents nine charities.
Obtaining professional legal advice from a qualified wills expert is the best way to ensure your wishes will be acted upon when the time comes and to safeguard your assets. Planning ahead will not only make things easier for those left behind, but it is also less likely to create complications at a later date.
Take, for example, Relevant Business Property, which includes some interests and shares in a business. This can qualify for inheritance tax exemptions, but the benefit can be lost if assets pass to the surviving spouse outright.
If a business is sold on death and the proceeds of the sale pass to the surviving spouse there can be inheritance tax implications on the death of the survivor. But careful planning within a will can mitigate the amount of inheritance tax that is ultimately payable.
If wills are set up correctly, in some circumstances, business owners can make use of any exemptions potentially available twice, meaning that more funds are passed down to the next generation free of tax.
Of course, not everyone takes such good advice, as these examples demonstrate:
Pablo Picasso died intestate and without a will in 1973 aged 91, leaving a fortune which included artwork, homes, cash, gold and bonds. It took six years to settle his estate at a cost of US$30 million and his assets were eventually divided up between six heirs.
Jimi Hendrix – it took more than 30 years for the battle over Hendrix’s estate to come to a conclusion as he left no will regarding the distribution of his estate. Like many other famous names, the case has been further complicated by the money his estate continued to generate long after his death.
Bob Marley – even though he knew he had cancer, Marley died intestate and his estate, worth a reported US$30 million, had dozens of claimants.
Stieg Larsson – the author of The Girl with the Dragon Tattoo and other books, died in 2004 without a valid will. It meant that according to Swedish law, his estate was divided between his father and his brother, leaving his lifelong partner of 32 years with nothing, although the family did grant her ownership of the couple’s apartment.
Craig Williams is a Partner at Thames Valley law firm, BP Collins. He handles a range of matters involving wills, trusts and probate. He has a particular emphasis on contentious inheritance disputes and has built up an impressive track record at court and a vast amount of experience in dealing with litigation on the validity of testamentary documents, claims under the Inheritance (Provision for Family and Dependents) Act 1975 and disputes regarding the administration of trusts and estates.